You're both wrong.
The Dreamcast was released about 3 years after the n64 (hence the better graphics), and was not released as competition for the ps2, as this system didn't come out for another 1-2 years after the DC depending on where in the world you lived. It didn't have a dvd drive, but then no other console ever had at this point either - considering it had a graphics card of its own, and online multiplayer access it was quite ahead of its time.
The PS2 getting released may have killed it, but it's still my preferred system of the two.
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Had free internet acces and was way too powerfull for it's time. Was the start of Soulcalibur !
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Yes, soul calibur 1...to this day one of my favourite VS titles.
Had the first online play I ever tried on a console, and in my personal opinion the servers/online play/features were way better than anything the PS2 ever ended up offering.
Probably had one of the greatest, though short lived, library of eclectic titles (almost) ever on a console, in my honest opinion the only systems to compete with it at this level would be the original NES and PC.